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Oh, Please Shut Up about CAN-SPAM

9/30/14
 
By Ken Magill
 
The most blatantly dishonest argument advanced in email marketing is the one repeatedly made by anti-spammers claiming the U.S. CAN-SPAM Act is toothless.
 
Richard Cox, CIO of Spamhaus, recently advanced this patently absurd view in the UK’s Register.
 
"If anything the issue in the USA as things stand is the unenforceability of the regime, [rather] than just the inadequacy of its enforcement,” he said, according to the Register. “There have been only a handful of actions in the entire 10 years this law has been in force: and even those actions were limited to the most egregious cases, and mostly just 'add-ons' to other enforcement actions."
 
As much as I respect Spamhaus for the work it does, Cox’s statement is so ridiculous it’s difficult to figure out where to begin.
 
First, just a handful of actions? A search of the Federal Trade Commission’s website on “CAN-SPAM” brings back dozens of press releases announcing CAN-SPAM-related actions. Cox must have bushel baskets for hands.
 
As for the criticism that the actions were limited to the most egregious cases, does Cox think federal resources should be spent against somewhat egregious cases? Almost egregious cases? Niggling little cases?
 
Also, the CAN-SPAM Act has been enforced as “mostly just add-ons to other enforcement actions” because the spammers the federal government should be—and apparently is—targeting are generally violating 137 other laws besides the CAN-SPAM Act. 
 
Of course CAN-SPAM is used in conjunction with other laws. Federal actions against organizations solely for spamming would be a ridiculous waste of taxpayer-funded resources.
 
We already have tools to punish organizations solely for spamming. One of the most effective ones is called Spamhaus.
 
President George W. Bush signed the CAN-SPAM Act into law on Dec. 16, 2003. The FTC announced its first actions under the law the following April—four and a half months later.
 
Let’s take a look at some of the toothlessness that has taken place over the last 10 years, starting with the most recently announced action: 
 
Just last month, the FTC announced that Yair Shalev and Kobeni Inc. will pay $350,000 to resolve FTC charges that they sent deceptive emails in advance of the Affordable Care Act (ACA) roll-out, falsely claiming that consumers would be violating the law if they did not immediately click a link to enroll in health insurance.
 
In January, the FTC filed a complaint against Yair Shalev and Kobeni Inc., alleging that their misrepresentations violated Section 5 of the FTC Act. It also alleged that their spam emails violated the CAN-SPAM Act by failing to provide consumers the opportunity to decline to receive future emails, and to provide a valid physical postal address.
 
In September of 2011, the FTC announced a settlement order banning Phil Flora from sending text message spam.
 
Flora was ordered to pay $32,000 on a settlement of $58,946.90.
 
“The FTC … alleged that the marketer advertised his text message blasting services by sending consumers illegal spam,” the Commission said in a statement. “The agency charged him with violating the FTC Act and the CAN-SPAM Act.”
 
In July of 2009, the FTC announced it had obtained a $3.7 million judgment against five hoodia weight-loss and human-growth-hormone pill spammers.
 
“The court found that the five defendants, located in Canada and St. Kitts, violated the FTC Act and the CAN-SPAM Act by participating in the spam operation,” the FTC said in a statement.
 
In October of 2009, a judge ordered Sanford Wallace—the original, and as far as I’m concerned only, spam king—to pay $711 million to social-networking site Facebook in a lawsuit over spam sent to its members.
 
The suit accused Wallace of sending messages through Facebook computers to Facebook users with materially misleading headers. The accusation was made claiming Wallace violated the CAN-SPAM Act.
 
The suit also accused Wallace of sending messages with misleading subject lines, a violation of the CAN-SPAM Act.
 
The complaint also accused Wallace of sending messages to Facebook users with no return address or functioning opt-out mechanism, violations of … the CAN-SPAM Act.
 
Moreover, the complaint accused Wallace of sending unsolicited messages without clear and conspicuous identification they were ads, no clear and conspicuous notice of the opportunity to opt out, and no physical postal address of the sender. 
 
Were these accusations made under Australia’s much-touted anti-spam law? Nope. New Zealand’s? No. They were made under the CAN-SPAM Act. 
 
Moreover, $711 million isn’t even the largest judgment awarded under the CAN-SPAM Act. In November 2008, Facebook won an $873 million judgment against Adam Guerbuez and Atlantis Blue Capital.
 
For those tempted to make the specious argument that CAN-SPAM is ineffective because the big fines are unlikely to be paid, a differently written law would not make the money any more likely to be collected.
 
Meanwhile in May 2008, MySpace won a $230 million judgment over spam sent to its members when a federal judge in Los Angeles ruled against Wallace and his partner, Walter Rines, in another case brought under the CAN-SPAM Act.
 
In February of 2008, The FTC obtained a $2.5 million judgment against Sili Neutraceuticals and Brian McDaid, individually, for CAN SPAM and FTC Act false-advertising violations.
 
In October of 2008, the Federal Trade Commission announced that with the help of New Zealand law enforcement it had shut down what it claimed was one of the largest spam rings in the world.
 
The U.S. District Court for the Northern District of Illinois froze the assets of Lance Thomas Atkinson of New Zealand and Jody Michael Smith of Texas, and issued a temporary restraining order prohibiting them from spamming and making false claims, according to the FTC.
 
The FTC claimed that Atkinson and Smith—doing business as Inet Ventures, Tango Pay, TwoBucks Trading and Click Fusion—made millions of dollars by sending billions of spam e-mails touting replica watches, penis-enlargement pills, weight-loss drugs and prescription pharmaceuticals.
 
The defendants were charged with various counts of fraud, and violating the CAN-SPAM Act by failing to include an opt-out link and a physical postal address in their emails.
 
In November of 2009, Alan Ralsky was sentenced to four years and three months in prison for wire fraud, mail fraud, and violations of the CAN-SPAM Act.
 
In July of 2008, Adam Vitale was sentenced to 30 months in prison and ordered to pay AOL $187,000 in restitution for spamming its subscribers. Vitale the previous year pleaded guilty to violating the … drum roll, please … CAN-SPAM Act.
 
Vitale’s partner, then-28-year-old Todd Moeller of New Jersey, was sentenced to 27 months in prison the previous November after pleading guilty to violating the CAN-SPAM Act.
 
Also in July of 2008, The FTC announced it had settled with some weight-loss product marketers for $29,000. What law were they accused of violating? The CAN-SPAM Act.
 
In March of 2008, Robert Soloway pleaded guilty to a bunch of charges related to his spamming operation. Though it wasn’t the only law put into play, can anyone guess what U.S. law was among those Soloway pled guilty to breaking? Why, the CAN-SPAM Act. He was forging “from” lines, among other things. 
 
Soloway did three years, eight months and 27 days in prison.
 
Also in March of 2008, the FTC announced ValueClick would pay $2.9 million to settle charges it used deceptive e-mails, banner ads, and pop-ups to drive consumers to its Web sites. 
 
The FTC charged that ValueClick’s use of deceptively labeled e-mail offering free gifts and its failure to disclose that consumers had to expend substantial sums of money to obtain the promised “free” merchandise violated the CAN-SPAM Act and the FTC Act.
 
In May of 2008, the FTC announced it had halted an illegal spam operation conducted by an adult web site and that it had obtained a court order fining the site’s operators $75,000.
 
The FTC alleged Mark Richman and Nathaniel Seidman sent spam with false or misleading header information, that failed to include an opt-out mechanism, and that failed to include a valid postal address, all violations of the CAN-SPAM Act.
 
In November of 2007, the FTC announced it had reached a settlement with Adteractive, Inc., doing business as FreeGiftWorld.com and SamplePromotionsGroup.com, in which the marketer agreed to pay $650,000 in civil penalties.
 
The FTC charged Adteractive with failing to disclose that consumers had to spend money to receive so-called "free" gifts.
 
The FTC alleged that Adteractive's failure to disclose material facts – such as the fact that consumers must pay money or provide some other consideration to obtain their "free gift" – was deceptive in violation of the FTC Act. 
 
“In addition, the agency charged that deceptive subject lines in Adteractive's spam e-mails violate the federal CAN-SPAM Act,” the FTC said in a statement.
 
In March of 2006, the FTC announced Jumpstart Technologies would pay $900,000 for violating the CAN-SPAM Act.
 
The FTC alleged that in its FreeFlixTix promotion, Jumpstart violated the law by disguising its commercial e-mails as personal messages and by misleading consumers as to the terms and conditions of the promotion.
 
“These defendants intentionally used personal messages as a cover-up for commercial messages," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection. “Deceptive subject lines and headers not only violate the CAN-SPAM Act, but also consumer trust.”
 
In April of 2006, the FTC announced a settlement with Optin Global, Inc., Vision Media Limited Corp., Qing Kuang “Rick” Yang, and Peonie Pui Ting Chen, that brought a permanent halt to their operations and required them to pay $475,000.
 
“Consumers forwarded more than 1.8 million of the defendants' e-mail messages to the FTC,” the Commission said in the announcement. “Those messages demonstrated that the defendants were violating almost every provision of the CAN-SPAM Act,” the FTC said.
 
In September of 2005, the FTC announced it had obtained a $2.5 million judgment against Global Web Promotions Pty Ltd., an Australian company that the FTC alleged was responsible for massive amounts of spam in the United States.
 
“In addition to making the deceptive and unsubstantiated claims, which the FTC alleged violate the FTC Act, the FTC also alleged that Global Web and its principals forged headers on e-mail to make it appear that they came from an innocent third parties – a practice known as spoofing,” the FTC said. “Undeliverable e-mail is returned to the innocent victims, often flooding their servers and interfering with normal operations. Spoofing violates the CAN-SPAM Act.”
 
In March of 2005, the FTC announced it settled a CAN-SPAM case alleging an outfit called Phoenix Avatar illegally sent millions of spam emails selling bogus diet pills. Phoenix Avatar’s principals agreed to pay $20,000, according to the FTC.
 
The settlement included a $230,000 suspended judgment to be paid if the court found misrepresentations in Phoenix Avatar’s financials, according to the FTC.
 
The list above should be enough to scuttle once and for all the ridiculous argument that CAN-SPAM is toothless.
 
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Terms: Feel free to be as big a jerk as you want, but don't attack anyone other than me personally. And don't criticize people or companies other than me anonymously. Got something crappy to say? Say it under your real name. Anonymous potshots and personal attacks aimed at me, however, are fine.

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Posted by: Joseph Vincent
Date: 2015-01-05 23:13:09
Subject: Spamhaus

My opinion of Spamhaus differs from yours. I am a residential PC user using Outlook. I have the same static IP address I've had for decades. Somehow, my IP address keeps getting blacklisted by Spamhaus. I go through their removal procedure. Never receive the confirmation email. No way to contact Spamhaus. My ISP (AT&T) is useless for getting this fixed. To me, Spamhaus is a faceless, self-appointed vigilante that has only made things difficult for me with no way to pursue resolution. I'm a retired IT professional. If I can't figure a way out of this impasse, the typical user has no chance.

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